Mumbai: The rupee snapped a three-session rally on Tuesday, as dollar demand from corporates and oil refiners weighed, while weak trade data and choppy domestic shares added to the downward pressure.
The partially convertible rupee ended at 49.4750/4850 per dollar, compared with Friday’s close of 49.10/11. Intra-day, the unit had moved in a wide band of 48.5200 to 49.1300.
“There was some buying interest in dollars for oil as well as for defence buying in the first half. In the later part of the day, one large corporate bought dollars,” said Pramod Patil, senior foreign exchange dealer at State Bank of Mauritius.
Oil is India’s largest import item and oil refiners are the biggest buyers of dollars in the local market.
Oil prices rose to near $116 on Tuesday on the back of strong seasonal fundamentals, as investors weighed the prospect of supply disruption from Iran against concerns over Italy’s sovereign debt risk.
The euro was at $1.3770, compared with $1.3773 in late New York trade on Monday , while the index of the dollar against six major currencies was trading down 0.02 percent at 76.948 points.
The main 30-share BSE index closed barely changed at 17,569.53 points.
“There are no major flows this week. This is also a truncated week so nothing much is there to give a direction to the rupee,” said N.S. Venkatesh, treasurer at state-owned IDBI Bank.
He expects the rupee to trade between 49.25 and 49.70 per dollar this week.
The market was closed on Monday and will be shut on Thursday on account of a religious holidays.
State Bank of Mauritius’ Patil said the rupee was also hurt by the trade deficit data.
India’s trade deficit in October is seen at $19.6 billion, the highest in four years, the trade secretary said on Tuesday, citing provisional data.
At this rate, the trade deficit for the year could breach the $150 billion mark, Rahul Khullar said.
Traders said the direction of the rupee will depend heavily upon news flows from the euro zone.
The Swiss franc fell on Tuesday as the threat of intervention drove selling in the safe-haven currency, even with bond markets heaping pressure on the euro ahead of a crucial vote in Italy, the latest flashpoint in the euro zone debt crisis.
The one-month onshore forward premium was at 24.75 points from 26.25 on Friday , the three-month was at 65 points from 70.50 at previous close and the one-year was at 178.75 points from 193.
One-month offshore non-deliverable forward contracts were quoted at 49.47, almost at par onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the United Stock Exchange and the MCX-SX all ended at 49.62. The total volume was very low at $3.54 billion compared to a normal $9 billion to $10 billion.
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